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5
Legal Issues in Collaborations
Legal issues can act as impediments to collaborations to develop
investigational combination therapies for cancer. These issues include
sharing risk and indemnification, allocating intellectual property rights,
and forging agreements between industry and government.
Suggestions from Various Workshop Participants to
Address Legal Issues in Collaborations
• G
iving patients more autonomy in deciding how much risk
they are willing to take with experimental therapies
• B
eginning conversations about collaboration and IP at an
earlier stage of development
• R
eserving IP protections for direct drug candidates, and
embrace precompetitive collaborations for work upstream
of specific candidates
• D
eveloping standardized material transfer agreements,
perhaps modeled on those used by the National Cancer
Institute’s Pediatric Preclinical Testing Program
• S
pecifying upfront those aspects of an agreement that
are negotiable and those that cannot be changed
• R
estricting collaborations to research and development
to avoid antitrust violations
43
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44 COLLABORATIONS TO DEVELOP COMBINATION CANCER THERAPIES
INDEMNIFICATION
Dr. Hohneker said that a major stumbling block for developing com-
bination therapies with multiple sponsors and investigators is determin -
ing patient safety and attribution of and reparations for serious adverse
effects that patients may incur during the course of a clinical trial. This can
be particularly nettlesome for combination therapies of investigational
agents for which the toxicities are not fully known. Determining indemni -
fication and having institutions share risk in clinical trials is a major issue
for combination immunotherapy clinical trials, Dr. June noted.
Dr. John Mendelsohn, president of the MD Anderson Cancer Cen -
ter, suggested that if patients and FDA are willing to accept the risk of
unexpected toxicities, clinical tests could go forward with such combina -
tion therapies. If a new toxicity develops, the clinical trial could then be
suspended for 3 months or so until animal models reveal more appro -
priate dose combinations to test, he said. Dr. Saber indicated that FDA
would not be averse to such a scenario, but thought the drug industry
would be more cautious and unwilling to pursue this testing tactic. Dr.
Mendelsohn added that “the biggest risk aversion occurs in our own
IRBs—they are the ones slowing things down more than anything. We
must work with them to teach them that if the patient wants to accept
the risk, it’s okay.”
INTELLECTUAL PROPERTY
Several speakers pointed out that solutions are needed for some of the
thorny intellectual property issues that arise with combination therapies,
especially those with more than one industry sponsor. Dr. Schlom pointed
out that a major impediment to companies sharing their cell lines and
drug candidates preclinically is intellectual property issues, while others
stressed that intellectual property rights impede clinical trials of combina-
tion cancer therapies.
As Ms. Anishiya Abrol, associate at Hogan Lovells, pointed out, intel-
lectual property agreements can be complex because a number of vari-
ables have to be decided, including who owns the compound and the
process for manufacturing it, as well as who owns the data and new
indications that might stem from the collaborative research. All parties
also have to agree on how patents will be enforced and whether patents
will be worldwide or only focused on certain key countries. Trade secrets
may still have to be protected even if no patentable inventions result from
the research.
“These are difficult questions to ask and answer at a very early stage,”
when there is so much uncertainty about what will result from the col-
laboration, Ms. Abrol said. But she added that “there’s been discussion
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45
LEGAL ISSUES IN COLLABORATIONS
about having these conversations earlier and earlier.” She noted that early
in drug development research, companies and academic institutions use
material transfer agreements that include intellectual property protections
for preliminary collaborative research.
“Ideally, we’d all like to say that we freely exchange knowledge and
allow people to go forth and use that knowledge to develop new prod-
ucts. But ultimately, the real value comes from the patent and the ability
to exclude others from making, using, offering, and selling that product.
That ability to exclude others is what really garners the economic value
of a patent, and which is why IP usually is a stumbling block in many
instances because there are a lot of costs that go into developing these
products that have to be recovered,” Ms. Abrol said.
Dr. Munos took a more negative view of intellectual property and
called it the “IP fortress” that causes companies to attempt to maximize
the value from all their IP and impedes sharing. “It’s the legal equivalent
of being pennywise and pound foolish because overall it is very coun-
terproductive,” he said. “A good rule for sharing is let’s not get hung
up in IP. Knowledge is not competitive, it’s precompetitive. Everything
upstream for a drug candidate is basically knowledge, and it shouldn’t be
encumbered by any IP. IP clearly starts when you have a direct candidate,
but the industry should join hands and forces upstream of drug candi-
dates, in order to bridge the knowledge gap and improve our understand -
ing of basic cell biology and pathology,” Dr. Munos said.
One positive example of such collaboration that Dr. Munos gave
was that of the Structural Genomics Consortium (Wellcome Trust, 2011),
whose aim is to determine the three-dimensional structure of medically
important proteins using a high-throughput approach. A consortium was
created for this project because “just hammering out all the confiden-
tiality agreements and so forth in order to do the job would take more
effort and more resources than to do the work in itself,” Dr. Munos said.
“When it comes to IP, there is some indication that we’re clearly beyond
decreasing return and into negative return,” he added. Other encouraging
examples in which IP issues were successfully dealt with so that collabor-
ative research could proceed are the I-SPY 2 TRIAL, the Biomarker-based
Approaches of Targeted Therapy for Lung Cancer Elimination (BATTLE)
trial and work of the Biomarkers Consortium (see Appendix A).
Dr. Chen pointed out that CTEP has modified the IP language in the
Cooperative Research and Development Agreement (CRADA) for indi -
vidual agents to “provide a platform to allow for combination studies.”
Dr. Jason Cristofaro, intellectual property advisor at the NCI Division of
Cancer Treatment and Diagnosis, expanded on CTEP’s efforts to foster
collaborative, multisite cancer research. CTEP currently has more than 80
collaborative agreements with pharmaceutical companies that use its net-
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46 COLLABORATIONS TO DEVELOP COMBINATION CANCER THERAPIES
work of Cooperative Groups, which includes more than 3,100 academic
institutions and cancer centers that conduct clinical cancer research. The
advantage of working through CTEP is that it offers a single framework
by which drugs are entered into the drug development pipeline and are
tested at a multitude of different locations, without the need to negotiate
separate agreements at each of these sites.
The CTEP agreement includes stipulations about how intellectual
property rights will be granted to a drug sponsor. This IP option was
modified in September 2003 to provide non-exclusive royalty-free (NERF)
commercialization licenses for inventions arising from combinations stud-
ies. Dr. Cristofaro noted that there are 150 combination clinical studies
currently being pursued in cancer. Two-thirds of these—100 studies—are
CTEP-sponsored studies because the NERFs removed the risk from the
partners to combine agents in studies, he said.
Dr. Cristofaro explained that if studies show that a combination of
therapies is more effective than the single agents used separately, that
result is a patentable invention. The new IP option gives both parties
who provided the single agents in a combination therapy trial the right
to exploit that invention. They still have to negotiate with each other if
they want to move their combination forward, but they do not have to
negotiate with a third party who otherwise might have ownership of the
combination in the invention. “This has been enormously successful at
providing the framework that encourages folks to do combination stud -
ies,” he said.
CTEP modified the IP provision of the CRADA again in 2009 because
it lacked provisions for certain rights related to the disposition of inven-
tions, such as biomarker assays, that are generated from the patient
samples and data collected in the study. The latest IP provision divides
inventions into those that stem from the drugs tested, and those that were
developed during the course of a study that did not use or incorporate
the pharmaceutical agents. The latter group of inventions would cover
the data that could lead to the development of biomarker assays, and the
new IP provision grants collaborators the license to use this intellectual
property for their own research purposes.
The IP provision also grants a label license that enables the companies
to use the data and information they receive on the invention in their
label for the drug or drug combination. This limited commercial label
license does not grant the right to make and sell the assay or invention
that has been created, so the academic testing sites can still partner with
small diagnostic companies to develop diagnostics using the biomarker
data collected in a clinical trial, and the diagnostic companies can still
sell, make, and profit from the diagnostics, with the understanding that
the original collaborator will still have the right to put the information
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47
LEGAL ISSUES IN COLLABORATIONS
on their label. Many drug industries view this arrangement favorably
because they do not want to get involved in creating diagnostics for their
drugs, according to Dr. Cristofaro.
Dr. Sherry Ansher, associate branch chief of the Agreement Coordina-
tion Group at NCI, stressed the importance of that biomarker language in
the new IP option by pointing out that of all the new clinical trials entail-
ing treatment studies done under INDs, 80–85 percent of them for 2010
included embedded correlative biomarker studies. She added that since
the inception of this IP option into material transfer agreements, “there
has been a huge increase in the number of material transfer agreements
that we’ve been able to execute, and about 10 percent of those are for
combinations.” Dr. Ansher also pointed out that there are specific material
transfer agreements that have been developed for NCI’s Pediatric Preclin-
ical Testing Program (PPTP). The eight institutions currently involved in
the PPTP agree to do a subset of testing on pediatric tumors to determine
agents that should be prioritized into clinical trials. “This program has
been successful and may be something to build on as a model for adult
clinical trials as well,” Dr. Ansher said.
But Ms. Deborah Banker, vice president of research at the Leukemia
& Lymphoma Society, pointed out that CRADAs often are not sufficient
for a combination trial to proceed. Dr. Ansher speculated that might be
because of outstanding scientific issues or issues on the part of the drug
company, such as the study not being a priority. “Companies have to
expend resources by providing the drugs to us for their studies and often-
times, they don’t fit with their development plans,” she said. “We do think
that’s changing as companies realize that they actually can get more out of
their agents by putting them into combination earlier, because for some of
those agents that have minimal or no activity on their own, this may be a
real area where they can benefit in combination with other therapeutics.”
Mr. Wes Blakeslee, executive director of Johns Hopkins Technology
Transfer, discussed the IP challenges involved in industry–academia col -
laborations. He pointed out that a major IP impediment is that universi -
ties cannot grant companies in advance licensing to subsequent technolo -
gies that result from studies done collaboratively. “We don’t know who
the inventors are going to be on the subsequent inventions so I can’t
prenegotiate a deal for inventors that I don’t know,” he said. “This is one
of the areas that people think is difficult to deal with, but we don’t have
any trouble figuring out how to do this,” he added. Such negotiations are
easier if the lawyers from all parties understand this issue, Mr. Blakeslee
said.
Mr. Blakeslee also stressed that when pharmaceutical companies
sponsor research at universities, the universities are reimbursed for their
costs and services; the indirect cost provided for in contracts with indus -
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48 COLLABORATIONS TO DEVELOP COMBINATION CANCER THERAPIES
try (in addition to what researchers are paid) is not for profit. He pointed
out that although leadership at his academic institution believes the uni -
versity should own the IP resulting from a study that uses the expertise of
its investigators, it is flexible in giving industry sponsors the opportunity
to acquire a license to use that IP. “Usually the option you get for that
license is a very fair and reasonable one. I don’t know of one sponsored
study at Hopkins that’s generated IP and the company who sponsored
the research didn’t get it on terms that were very favorable to them,” Mr.
Blakeslee said. He added that because Johns Hopkins University is a tax-
free entity, it is restricted from doing any commercial work. This restric-
tion prohibits the university from entitling sponsors to any of the IP that
results from studies in advance of the study being done. Johns Hopkins
also has a charter that stipulates that researchers have to be able to publish
their research results.
Dr. Schlom raised the issue of the excessive amount of time needed
to finalize collaborative agreements. “I know these are referred to as
products. But they’re also potential therapies and people are dying while
these things take a year and a half to 2 years for no good reasons,” he
said. Dr. Cristofaro agreed that the CRADA process involves several lay -
ers of review that can have multiple iterations and be time consuming. He
added, “Standard agreements don’t work because lawyers want to tinker
with them so they best represent the interests of their clients—that’s what
good lawyers do.”
Dr. Ansher noted that she did an agreement in as little as 4 months
because of the motivation of both the company and NCI to move things
forward. She said one way of speeding up the contracts process is to
specify what aspects of an agreement are negotiable and what aspects,
such as data sharing and publication rights, cannot be changed. Dr.
Cristofaro called for developing core principles that must be followed in
any agreement. Dr. Martin Murphy, CEO of the CEO Roundtable on Can-
cer, elaborated on the standard clauses the CEO Roundtable developed
for agreements between industry and academia (see Appendix A). Ms.
Lydia McNally, vice president, and head of Oncology Patents at Novartis
Pharmaceuticals Corporation, agreed that “it is the core principles that
matter, as opposed to model agreements, because we have to look at every
drug or compound differently. But having core principles really makes the
process much quicker because everyone is starting at the same place, and
just minor tweaking is needed for the specific situation.”
Mr. Blakeslee added that it can be expedient to identify the appropri-
ate person to contact in the company about a material transfer or other
intellectual property agreement, and that often time is wasted waiting for
the right person to respond. “Our experience has been that delays haven’t
occurred when we’ve had a lawyer to talk to and get the deal negotiated,
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LEGAL ISSUES IN COLLABORATIONS
but rather when there’s nobody to talk to and we spend the year work-
ing our way up the line to get somebody with decision-making authority
who’s willing to talk to us about exactly what the agreement should look
like,” Mr. Blakeslee said. Ms. Abrol added, “Once you get somebody on
the phone who is knowledgeable about these issues, you can cut through
them pretty quickly. It’s simply a matter of getting the decision maker on
the phone, because often times the initial three or four rounds are people
who can’t make decisions.”
Ms. McNally noted that Novartis saves time in its contract negotia -
tions by not involving lawyers most of the time, but rather just using an
agreed-on material transfer agreement that can be reused with the same
institution for different applications. “So anytime you request a com-
pound, we don’t have to have a contract discussion, we only have to have
a scientific discussion on whether or not we’re going to agree for this
study. The lawyers don’t have to be involved at all, and that’s been very
effective,” she said. Mr. Blakeslee said his institution has such standard
agreements with most of the big pharmaceutical companies it deals with
on a regular basis. “Once in a while, you go to a different division and
they don’t accept the company’s standards and we need to start all over
again. But for the most part, they work very well,” he said.
ANTITRUST LEGISLATION
Although some drug companies have expressed reluctance to con-
duct collaborative R&D on investigational drugs with other companies
because of concerns about violating antitrust laws, Mr. Robert Leibenluft,
partner at Hogan Lovells, explained that these laws should not restrict
such collaborations. He pointed out that antitrust laws were established
to promote competition to drive innovation, lower prices, and improve
the quality of products on the market. The Federal Trade Commission
(FTC), which oversees pharmaceutical mergers, is most concerned with
the merging of pharmaceutical companies that have research efforts in
a narrow area, for which there are no comparable research efforts being
done by other companies, Mr. Leibenluft said. But it is hard to predict
if R&D collaborations will lead to companies having monopolies on the
products that might result from them. Mr. Leibenluft noted that “the
agency is a little bit reluctant to go after R&D collaborations, because they
realize that many of those efforts may not end up in a product being sold.”
The joint antitrust guidelines for collaborations among competitors
from FTC and the Department of Justice (DOJ) can be accessed online, 1
1 See http://www.ftc.gov/opa/2000/04/collguidelines.shtm (accessed December 14,
2011).
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50 COLLABORATIONS TO DEVELOP COMBINATION CANCER THERAPIES
he noted. The guidelines have a section on joint ventures in R&D which
recognizes that if companies have complementary assets, technology, and
knowledge, R&D collaborations may enable these companies to more
quickly and efficiently develop new or improved goods, services, or pro-
duction processes. “There’s a recognition that R&D joint ventures really
can be procompetitive,” Mr. Leibenluft said. He added that embedded
in the FTC/DOJ guidelines, there is a safety zone for R&D competition
analyzed in terms of innovation markets (see Box 5-1).
To encourage collaborations, Congress passed the National Coopera-
tive Research Act of 1984 and the National Cooperative Research and Pro-
duction Act of 1993. These acts ensure that entities that register with the
DOJ or the FTC before they venture into research collaborations will have
limited liability and more lenient treatment. But Mr. Leibenluft noted that
“antitrust counseling can get you in pretty safe territory, without having
to go through the requirements of these Acts.”
Mr. Leibenluft stressed that antitrust rules prohibit companies from
collaborating to fix their prices and restrain trade such that together they
have a larger market share and market power. “If you had collaborators
that together were the only entities doing research in a certain area, that
would raise antitrust issues. On the other hand, if there are lots of compa -
nies who are doing research, there is probably little concern because there
are going to be lots of those products out there,” he said, and the burden
of proof is with the FTC. “If you’re working on a collaboration for which
BOX 5-1
Department of Justice/Federal Trade Commission
Collaboration Guidelines: Safety Zone for R&D
Competition Analyzed in Terms of Innovation Markets
• pplies where there are three or more independently controlled research efforts
A
in addition to those of the collaboration that possess the required specialized
assets and incentives to engage in research and development (R&D) that
would be a close substitute of activity in the collaboration; and
• n defining close substitutes, consider:
I
o ature, scope, and magnitude of R&D efforts
N
o ccess to financial support
A
o ccess to intellectual property, skilled personnel, or other specialized assets
A
o iming
T
o bility, either alone or with others, to commercialize innovations
A
SOURCES: Leibenluft presentation (June 14, 2011) and FTC and DOJ, 2000.
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LEGAL ISSUES IN COLLABORATIONS
it’s very speculative whether it would result in a breakthrough, you’re
more likely to pass antitrust muster because you’re further away from
really getting to competing products, and that would mean the likelihood
of competitive harm is less.”
In its review of a collaboration, the FTC or the DOJ also considers the
potential pro-competitive benefits and whether there are less restrictive
alternatives than the collaboration. “If you don’t need the collaboration
[to achieve the same result], the antitrust enforcers would prefer that the
competition continue,” Mr. Leibenluft said. “But if there’s a strong argu -
ment to be made that, on their own, companies or entities can’t get to
where they need to be, then that strongly supports a collaboration,” he
added.
Because of its concern that no one company dominate the market with
its products, the FTC is also less likely to be concerned about violations of
antitrust laws if there are several similar collaborations, according to Mr.
Leibenluft. “A collaboration involving everybody in the pharma industry
would raise more serious antitrust concerns obviously than if it’s a few
players, and there’s others out there who have their own collaboration in
competition,” he said.
Another consideration is whether the collaborators will compete with
each other over the product that is produced from a collaboration, or
whether that collaboration also encompasses commercializing the prod-
ucts. “You can have an R&D joint venture, where certain efforts are made
to discover something, and then both parties in the collaboration might
compete with each other on marketing, pricing, and producing that prod-
uct. If that happens, then the antitrust issues are much reduced because
there’s competition in the final product that’s being sold to the market,”
Mr. Leibenluft said.
Companies also shouldn’t be extending their collaborations to encom-
pass areas outside the research and development area of the collaboration,
he said. “The general thrust of the antitrust laws is that competition is
good. If you need to collaborate, that may be fine, but you shouldn’t have
that spill over into things that you don’t really need to be talking about or
coordinating,” Mr. Leibenluft said.
He summed up his presentation by stating that there are fewer anti-
trust concerns with research and development ventures when:
• everal comparable R&D efforts are ongoing;
S
• he collaborators do not already have entrenched products;
T
• he collaboration is limited to core research efforts, with the col-
T
laborators free to independently commercialize the resulting prod-
ucts; and
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52 COLLABORATIONS TO DEVELOP COMBINATION CANCER THERAPIES
• t is possible to demonstrate convincing benefits that the collabora-
I
tion will achieve that could not as easily be achieved independently.
Mr. Leibenluft noted that it is possible to obtain prior guidance with
the FTC or the DOJ, both of which oversee antitrust laws. Antitrust
lawyers are also used to advising research and development efforts. “I
don’t think it should be an insurmountable barrier if it’s done right,” Mr.
Leibenluft concluded.
